Brian Lenihan Jnr (Dublin West, Fianna Fail)

I would like to answer the questions raised by Deputy Burton. She is labouring under a fundamental misapprehension in that we are not making Sharia law the law in Ireland in this legislation. We are talking about Sharia financial transactions. The governing law is Irish law and the dispute resolution mechanism is Irish law. We are not conceding ground to some foreign tribunal or religious tribunal about a final determination about the implications of these transactions in Irish law. An Irish court seized of this matter will apply the law as enacted by the Oireachtas, not Sharia law. If an issue arises in regard to the latter, it must be proven as it applies to financial transactions. It must be proven as a matter of evidence before the court and the court must have the residual power of public policy if the particular transaction infringed public policy.

It is difficult to see, in regard to a financial transaction primarily concerned with the morality of lending, how an issue will arise in regard to public policy in the State. Clearly, if questions arose relating to gender equality, for example, an issue might arise. I do not envisage it arising. It is, therefore, important that the House understand we are not legislating for the express enactment of Sharia law in Ireland. This legislation facilitates transactions that are structured in a Sharia-compliant way. Our law facilitates transactions that are facilitated in a US-banking-law-friendly way. It is only common sense for us to do the same in regard to Sharia financial transactions in our financial arrangements as an incentive to attract investment into the country and not to automatically bar and double-bar the door of investment to that group that believes in structuring its financial arrangements in the Sharia way. There is no abdication of the powers of the Irish Legislature in dealing with this matter along those lines.

A separate matter was raised by Deputy Burton. She stated, rightly, that what has been done to date will apply in the context of the attraction of investment in the IFSC. I have discussed this matter with many of my Islamic constituents. Quite a few of them are quite content with the arrangements they are in a position to enter into with various Irish financial institutions, or at least as satisfied as any of us can be with such institutions these days. They have a preference for the arrangements they choose and do not feel conscientiously constrained. Some, however, do feel conscientiously constrained and it is important to address their concerns. From a tax perspective, the groundwork has been laid for the introduction of such products in that part of the payments made by a person paying a mortgage may be treated as interest for tax purposes. However, further changes are required to stamp duty legislation to enable the purchase of a property pursuant to a Sharia-compliant mortgage to come fully within current tax arrangements. It is anticipated that such measures will be included in a future finance Bill.

As far as I am aware, no country has introduced a full measure of provisions immediately. In this regard, the introduction of tax measures consistent with Sharia financial transactions should be seen as a gradual process. There are regulatory issues that would require finalisation in that particular context. I hope that is of assistance to the Deputy, along with the information note.

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